TechDogs-"A Simple Guide To Asset Tokenization Platform"


A Simple Guide To Asset Tokenization Platform

By TechDogs

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What’s the hottest technology out there at the moment? Our bet would be on blockchain – we mean, everyone has surely heard of it! You may not understand its working or even the extent to which it has revolutionized our world but you know it’s a big deal, right? From cryptocurrencies to NFTs (Non-Fungible Token), there are several blockchain-based applications making waves.

Among the lesser-known applications is asset tokenization. Yes, we know it sounds quite technical and complicated. However, that’s why we’re here – to simplify complex technologies with a twist. Trust us, asset tokenization has applications in every industry and can transform how we define ownership of assets.

In this blog, we will be token about Asset Tokenization Platforms; how they work, their evolution, benefits, future and a lot more!
TechDogs-"A Simple Guide To Asset Tokenization Platform" Transform Those Assets Into A House Of Digital Tokens
Imagine you place an order at a fast-food joint. The server behind the counter takes your order and hands you a receipt. Now, how would you know when your order is ready? Once the screen on top of the counter shows the number that’s on your receipt, you collect your order from the counter, right? It essentially confirms that you are the "owner" of the chicken burger, large fries and diet soda.

However, what happens when everyone places the same order? Chaos and confusion, right? When this example is scaled up across multiple fast-food joints, managing and verifying ownership of physical assets can get tricky. Thanks to blockchain, we can make it simpler! Real-world assets can now be represented digitally on blockchain networks. This results in the creation of digital proof-of-ownership for physical goods. Once a person acquires ownership of an asset through a digital token, the ownership cannot be changed or revoked. (Yes, no one can walk away with your scrumptious fries!)

Blockchain technology, being immutable, offers a solid censorship-resistant record of ownership. Yet, you need a dedicated technology to help you tokenize physical assets and that's precisely what an Asset Tokenization Platform does. #PrettyMuchInTheName

Let’s look at it in detail.

Understanding Asset Tokenization Platforms

We need to understand what tokenization means: tokenization of physical assets is the process of transforming a tangible asset's value into digital tokens. Essentially, a physical asset is associated with a unique digital identifier. These tokens can be stored, tracked and traded on a blockchain network, allowing businesses to verify the ownership of the asset via the blockchain.

Various assets can be tokenized, including real estate, fund ownership, precious metals, equity shares, physical products, music, art, and other collectibles (yes, even your peri-peri fries!). Financial institutions and businesses use Asset Tokenization Platforms as they offer better proof-of-ownership, quicker settlement, increased liquidity, improved risk management and cheaper asset management. 

Now, let’s dive into this burger, we mean, the history of Asset Tokenization Platforms!

Evolution And Origins Of Asset Tokenization Platform

Naturally, this concept borrows heavily from blockchain technology, which operates on the basic idea of trading digital tokens securely. The idea of attaching proof of ownership to tokens came much later.

Around 1600, the Dutch developed a system of finance that made capital markets available to the public. Individuals could invest in emerging financial products such as stocks and bonds rather than retail goods (clothes, precious metals, etc.). This was the first recorded evidence of ownership of intangible assets.

In the last few decades, more intangible assets were introduced. Digital cash or cryptocurrencies are common examples today – and we are sure you’ve heard of non-fungible tokens or NFTs! Although it does not exist in a physical form, you could be the sole owner of a premium NFT showing a gyrating burger.
As blockchain technology improved, digital tokens with ownership emerged. Asset tokenization, as it was called, converted physical ownership rights into digital tokens on a blockchain. Soon, physical objects could be digitally represented and owned through tokenized assets. Naturally, we developed dedicated platforms that allowed physical assets to be digitally represented, owned and traded using these digital tokens.

Yet, the question on everyone’s mind is – how the hell does it all work?

How Does Asset Tokenization Platform Work?

Imagine you own an office building. Instead of leasing it the old-fashioned way, you can ‘tokenize’ every floor. That is, you create a digital token representing each floor that you want to lease. These tokens exist on a blockchain network and can be bought by users. Now, each business or individual leasing a floor from you would own a unique digital token. As the landlord, you could calculate the rent and utility bills on the duration of ownership of the tokenized asset. If a tenant opts out, their token is made available on the blockchain to new tenants. Do you see how streamlined ownership has become?

This can also be done with other physically traded assets such as diamonds, gold, carbon credits or even oil barrels. Owning tokenized assets improves the verification of ownership through blockchain. Also, an Asset Tokenization Platform can conduct transactions from fiat to token, token to fiat or token to token. For example, you can pay for your tokenized office space using cryptocurrency, US dollars or your own token!

Yet, this brings us to an important question…

So, What Assets Can We Tokenize?

As a token implies ownership, they come in various forms – each one provides different types of ownership. Broadly, they can be divided into four types:
  • Asset

    An asset refers to any physical item of value. It includes personal assets such as real estate, or business assets owned by companies such as vehicles, machinery or office spaces. Owning this kind of token gives you ownership over the associated asset.

  • Equity

    Equity (shares) can be tokenized too. Although shares are already digital, tokenized assets are stored securely in an online wallet hosted on a blockchain network. Investors typically buy tokenized investments such as publicly listed shares or pre-IPO shares.

  • Investment Funds

    An investment fund can be tokenized to represent an investor’s share of the fund. Each investor is provided with unique tokens which improve ownership. Investment funds usually have low liquidity. However, tokens associated with these funds can be traded instantly via blockchain apps promoting higher liquidity and security.

  • Services

    Yes, you can tokenize a service too! Businesses can offer tokens that customers can use to purchase services. For example, payment processing services can tokenize sensitive information during transactions. This means the third parties can quickly verify your identity as your token is unique to you.

You can create tokens for your IT service or sell scrumptious hot dogs – but you won’t till you understand the benefits, right? So, here they are!

Benefits Of Asset Tokenization Platforms

TechDogs-"Benefits Of Asset Tokenization Platforms"A Distracted Boyfriend Meme Showing How Everyone Is Interested In The New Ownership Rights Delivered By Asset Tokeinzation  
  • Ability To Set Smart Contracts

    Smart contracts are self-executing contracts stored on blockchain networks with embedded terms and conditions. When these conditions are met, specific actions are carried out automatically, which reduces transaction fees and time.

  • Better Compliance Standards

    Tokenized assets foster trust as only the owners of the tokens can perform certain actions. Hence, businesses can easily ensure compliance with business policies.

  • High Liquidity Of Assets

    Tokenization of assets offers high liquidity of traditionally illiquid assets. Physical assets can be bought, sold or traded remotely – heck, you can buy a tokenized office space in Shanghai sitting at your home in New York City!

  • Capacity For Fractional Ownership

    Tokenizing assets and fragmenting them into fractions paves the way for investors to acquire assets at a fractional cost. We mean, you are more likely to sell one office floor or a section of it to a client than the entire building, right?

  • Safeguarding Investor Rights

    Any investor buying a token has rights over the associated asset as the ownership details are automatically captured on blockchain networks. Investors can then trade the digital tokens and with them, the ownership of assets.

  • Access To Global Markets

    The ever-growing tokenization market can be credited to the rise in crypto exchanges. Being a global commodity, these exchanges have allowed investors to trade tokens associated with assets globally.

  • Enhanced Security

    As tokens are stored on a blockchain network, ownership is secured by cryptography. It means that the ownership of assets cannot be deleted or modified without the owner’s consent.

Surely, with so many benefits, the Asset Tokenization Platform needs to be on every business’s radar. Yet, blockchain adoption has always been slow – and this technology is also taking the “slow-but-steady-wins-the-race” approach. Read on to know how Asset Tokenization is set to change in the future!

What’s The Future Of Asset Tokenization Platform

Blockchain technology is revolutionizing the financial services industry - but you knew that! The most disruptive of blockchain-based innovations, however, is asset tokenization. Thanks to the transparency, cost efficiency and accessibility it affords, tokenization will create a unique trading system.

In fact, according to research by Berger & Keyrock, tokenization of equity could generate gains of 4.6 billion Euros by 2030. Any investment, property, service or asset could be "tokenized" and made available online. Smaller investors will consequently discover new possibilities in the investment market. Businesses will also have the opportunity to create new securities through asset tokenization.

Additionally, faster ownership verification will be made possible by Asset Tokenization Platforms. Most importantly, it will be more feasible for individuals to own fractional tokens than own an entire physical asset. We mean, there are already firms that will let you fractionally own Monet or Picasso’s paintings!


TechDogs-"Conclusion"A Hide The Pain Harold Meme For The Conclusion Section Of The Article.
The idea of asset tokenization is relatively new. Yet, Asset Tokenization Platforms will secure proof-of-ownership, currently an industry-wide challenge. Businesses are eager to apply this lucrative technology, as billions of dollars’ worth of physical assets have already been successfully "tokenized." We are sure there are still myriad real-world assets that need to be tokenized. NFTs are just the beginning!

Frequently Asked Questions

How Does Asset Tokenization Platform Work?

An Asset Tokenization Platform operates by converting tangible assets into digital tokens on a blockchain network. This process involves associating a unique digital identifier with each physical asset, allowing for easy tracking, storage, and trading of tokens representing ownership. For instance, instead of leasing an entire office building traditionally, each floor can be tokenized, and users can buy tokens representing ownership of specific floors. Transactions can occur from fiat to token, token to fiat, or token to token, enhancing ownership verification through blockchain technology and streamlining asset management.

So, What Assets Can We Tokenize?

Asset tokenization encompasses a variety of assets, including physical items, equity shares, investment funds, and services. Tokens can represent ownership of real estate properties, vehicles, machinery, office spaces, publicly listed shares, pre-IPO shares, shares of investment funds, and even services such as payment processing. Each type of token provides different forms of ownership and benefits, catering to diverse investment and business needs.

What’s The Future Of Asset Tokenization Platform?

The future of Asset Tokenization Platforms is promising, driven by the disruptive potential of blockchain technology in revolutionizing financial services and asset trading. Asset tokenization enables transparent, cost-efficient, and accessible trading systems, opening up new possibilities for smaller investors and businesses alike. As the technology evolves, faster ownership verification, increased fractional ownership opportunities, and the tokenization of various assets will likely become more prevalent, transforming traditional ownership models and unlocking new avenues for investment and asset management.

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